Finding Text
Finding 2024-017 - U.S. Department of Education (Title IV Student Financial Aid Programs - Direct Subsidized Loan Overpayment (material weakness): Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2024; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2024; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2024; Federal Work-Study Program, FAL No. 84.033, June 30, 2024. Criteria – Per 34 CFR § 685.303 (g), institutions must ensure that the loan originated and disbursed does not exceed the student’s loan eligibility under annual and aggregate loan limits. Loans may not exceed limits established under annual subsidized loan limits, grade level progression, and cost of attendance minus estimated financial assistance (EFA). Institutions must adjust or cancel excess amounts before disbursement. Condition – During testing of Direct Loan disbursements, we identified that one (1) out of sixty (60) students received a Direct Subsidized Loan disbursement in excess of the federally allowable amount. The loan amount posted to the student’s account exceeded the maximum subsidized loan eligibility based on the student’s grade level, dependency status, and annual loan limits. Cause – The overpayment appears to have resulted from failure to properly verify the student’s annual loan limit. Effect – The student received a subsidized loan in excess of allowable federal limits, resulting in an improper disbursement. The overpayment represents a liability to the University, which may be required to return the excess loan amount to COD. Questioned Costs - $1703 Perspective – Although the exception was found in only one student, Direct Loan over awards are considered high-risk violations, as they reflect weaknesses in awarding logic and system configuration. Even a single overpayment indicates a need to review processes for determining loan limits, grade level progression, and system controls. Repeat Finding - No Auditor’s Recommendation - The University should verify loan eligibility prior to disbursement, review grade level and program progression controls, and strengthen system controls. Management’s Response – Management has added secondary review, implemented periodic internal monitoring, and conducted targeted staff training tied to updated procedures. View of Responsible Officials – Management agrees with the finding and acknowledges that Direct Subsidized Loan amounts were not consistently adjusted to remain within the student's allowable federal loan eligibility limits prior to disbursement.